Disputes between Investors and the State: the Way to Dialogue

The Ukrainian business environment remains difficult for international companies, and Ukrainian courts are not always able to protect the rights of investors. At the same time, the Ukrainian government is becoming more open to a peaceful settlement of disputes with foreign investors.

When the authorities or courts of Ukraine are able to protect the legitimate rights of foreign investors, they can use international instruments for resolving disputes with the state on international agreements of Ukraine on the promotion and mutual protection of investments.

Any unfair or discriminatory actions of the state, as well as denial of justice, may violate the rights of foreign investors in accordance with international agreements.

Such actions may include:

  • Delay or refusal to refund VAT.
  • Arbitrary cancellation of licenses or permits.
  • Arbitrary calculation of taxes or customs duties.
  • Currency restrictions of the National Bank of Ukraine.
  • Arbitrary criminal prosecution or other unlawful coercion.
  • Unfair or discriminatory distribution of licenses or permits.
  • Unfounded or discriminatory fines of the Antimonopoly Committee of Ukraine.
  • Unpredictable, unjustified or discriminatory price regulation or price restrictions.
  • Unjust or discriminatory forced conversion of debt securities (for example, conversion of Eurobonds of Privatbank).
  • Laws and other regulations that give preference to Ukrainian citizens and companies and deny equal treatment to foreign investors.
  • Any other actions that harm foreign investors and their investments on the territory of Ukraine.

Negotiations with the Government of Ukraine in accordance with international agreements are effective, especially in the early stages of the dispute, and, in some cases, the only effective means of protecting the rights of investors.